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50-bp Fed cut back on table after FT, WSJ reports

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Odds on super-sized reduction ramp up to 45% from 28%

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Dollar slumps to lowest vs yen since Dec 28

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Crude continues climb as Francine impact assessed

(Updates prices as of 0510 GMT)

By Kevin Buckland

TOKYO, Sept 13 (Reuters) - The dollar slumped to its

lowest this year on Friday versus the yen while gold hit a

record high as investors ratcheted up bets for a super-sized

Federal Reserve interest rate cut next week.

Shares in Asia also advanced after traders raised bets back

to 45% for a 50-basis point U.S. rate cut on Sept. 18, according

to LSEG data at 0510 GMT, from about 28% before articles in the

Financial Times and Wall Street Journal each called the decision

"a close call".

Influential former New York Fed President Bill Dudley later

said at a forum in Singapore "there's a strong case for 50."

"This is yet another twist in the (Fed rate cut) debate,"

said Tony Sycamore, an analyst at IG, noting the tug-of-war

being played out in bond futures and the dollar-yen rate in

particular.

"Everybody thought we were back on track for 25 basis

points, and now 50 is suddenly back on the table."

The dollar dropped as much as 0.81% to 140.645 yen

, the weakest level since Dec. 28.

The yen has also been supported this week by hawkish

comments from Bank of Japan officals, with policy board member

Naoki Tamura on Thursday saying he was "worried that upside

inflation risk was heightening."

The dollar index, which measures the currency against

the yen and five other major rivals, dropped to a one-week

trough at 101.00.

Commonwealth Bank of Australia strategist Carol Kong says

current pricing for Federal Open Market Committee (FOMC) easing

is too high.

"We continue to favour a 25 bp cut over a 50 bp cut,

because the labour market and the broader economy remains

resilient," she wrote in a note.

"Current market pricing is aggressive compared to the

average FOMC rate cutting cycle outside of recessions. We, along

with the consensus of U.S. economists, do not expect the U.S.

economy to enter a recession."

The euro added 0.07% to $1.1083, building on

Thursday's 0.57% advance after European Central Bank President

Christine Lagarde pushed back on prospects of a rate cut in

October, following a widely expected quarter-point reduction on

Thursday.

Gold extended Thursday's 1.9% climb to reach a fresh

record of $2,570.03, buoyed by the dollar's weakness.

MSCI's broadest index of Asia-Pacific shares outside Japan

rallied 0.48%.

Hong Kong's Hang Seng led advances in regional

markets, gaining 0.94%. Mainland Chinese blue chips

added 0.09%, despite expectations that more weak economic data

will be released on Saturday.

Australia's benchmark climbed 0.25%. South

Korea's Kospi edged down 0.1%.

Japanese stocks underperformed, though, dragged lower by the

stronger yen, with the Nikkei losing 0.35%.

Japan, mainland China and South Korea are all heading into

long weekends, with Tokyo back on Tuesday, China on Wednesday

and South Korea not until Thursday.

U.S. stock futures added 0.1%, following gains on

Thursday for the cash indexes.

Pan-European STOXX 50 futures advanced 0.42%.

Crude oil continued to climb after surging around 2%

overnight, as producers assessed the impact on output after

Hurricane Francine tore through the Gulf of Mexico.

U.S. West Texas Intermediate crude futures rose 0.71%

to $69.46 per barrel, building on Thursday's 2.5% rally. Brent

crude futures added 0.65% to $72.44, after a 1.9% jump

in the previous session.